Thursday starts with the weakness in the U.S. dollar and new all-time highs in the S&P 500. The second part should not be a surprise but the weakness of the USD is something new in 2020.
To show you the drop on the USD, we will use the DXY, so a Dollar Index. We already mentioned this instrument this week and we were obviously bearish. We pointed out at the shooting stars candles on the daily chart, which were bouncing from the major down trendline. Price could not resist such a big selling pressure and went down confirming the negative sentiment towards the U.S. currency.
The weakness of the USD has implications all over the globe. For example on the price of commodities. Decline on the dollar usually means rise in the Gold. On the 14th of January, Gold drew a hammer candle on the daily chart. That additionally looks like a second bottom in the double bottom formation. Both structures are bullish and it seems that the price will continue to go up.
Long time – no see for the NZD/USD, which looks ready for another bullish wave. I think the Kiwi is still influenced by the big inverse head and shoulder formation from September. The recent drop was just a correction, which most probably ended yesterday with the price drawing a hammer on the daily chart. Today, Kiwi is breaking the mid-term dynamic resistance and is showing a willingness to climb even higher. The sentiment seems positive.